Initiatives to Improve Corporate Value
Responses to the Ongoing International Discussion over
Further Tightening of Financial Regulation
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Major items of financial regulation being discussed internationally / Impact on Resona
There are no regulations that have a significant impact on us, including the finalization of Basel 3, and we are steadily preparing
for the application of each of these regulations.
Major regulatory items
Finalization of Basel 3
Review of Standardized
Approach (SA) (Credit and
operational risks)
Review of IRB approach
Capital floor based on SA
Liquidity regulations
(LCR/NSFR)
Leverage ratio
IRRBB
(Interest rate risk in
the banking book)
Derivatives-related
(Margin requirements,
SA-CCR, CVA, etc.)
Various capital buffers
G-SIBS/D-SIBS, TLAC
Discontinuation of LIBOR
(London Interbank
Offered Rate)
Outline of regulation
Reviewing credit risk calculation method to enhance the risks
sensitivity and improve comparability. Reviewing operational
risk calculation method to reflect loss data.
New capital floor rule requiring a reference to the SA
(final output floor calibration: 72.5%).
[LCR] Requiring banks to hold high-quality liquid assets to
prepare for significant outflow of funds under a severe stress.
[NSFR] Requiring banks to hold certain capital and liabilities for
the risk of having illiquid assets.
Introduced to complement capital adequacy ratio requirements.
Tier 1 capital as a numerator. Exposure amount, not RWA,
to be a denominator.
To strengthen the interest rate risk management by measuring
the decline in economic value of equity (EVE) and net interest
income (NII) under certain interest rate shock scenarios.
Requiring banks to pay/receive margins for OTC
derivatives not to be cleared by CCP, reviewing the calculation
method of derivatives exposure and CVA.
Capital buffer requirements include capital conservation buffer,
counter-cyclical buffer and SIBs' buffer. TLAC requires banks to
hold additional capacity to absorb loss.
Major tenors in the U.S. dollar LIBOR will be discontinued
at the end of Jun. 2023, and other LIBOR will be discontinued
at the end of Dec. 2021.
Important updates
Impact of Basel 3 finalization has already been factored into each
strategy.
Common Equity Tier 1 (CET1) capital ratio based on finalized Basel 3
(excluding net unrealized gains on available-for-sale securities) is
around 10%*
XTrial calculation to CET1 capital ratio of 12.09% as of Mar. 31, 2023 by only
taking in consideration the estimated increase in RWAs due to the
finalization of Basel 3 (SA and capital floor revisions, fully phased-in basis).
Minimum requirements are applicable to banks subject to the
International standard.
Pillar 2 regulation. The threshold of EVE is set at within 15% of Tier 1
capital (in case of domestic standard banks, within 20% of Total
capital), the figures are within the threshold.
Resona is subject to variable margin requirements from Mar. 2017.
Initial margin requirements are introduced from Sep. 2022.
Adoption of SA-CCR (Standardized Approach) and regulatory
accounting CVA is under preparation for introduction.
Capital buffers are applicable to G-SIBS/D-SIBs, and banks subject to
the International standard. TLAC is applicable to G-SIBS and other.
We are proceeding with the transition from LIBOR, such as contract
changes with customers, etc.
Resona Holdings, Inc.
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